Describing the free fall of the rupee as “short-term shocks”, revenue secretary Sumit Bose on Saturday said India is looking at possible currency swap agreements with more trading partners in order to tackle the ongoing crisis.
“Work is going on. We already have some agreements with Japan. It is still in the early stages,” Bose told reporters on the sidelines of the annual conference of Direct Taxes Professionals’ Association.
Currency swap agreements, which involve exchange of one currency for another, emerged as an important derivative tool to hedge the exchange rate risks following the global financial crisis of 2008. India has signed currency swap agreements with Japan ($15 billion) and Bhutan ($100 million).
Asked which are the other countries with whom India is exploring the possibility of the currency swap pacts, Bose said, “People are working on that.”
A few days ago, the commerce and industry ministry had formed a task force comprising representatives from the economic affairs ministry, Reserve Bank of India (RBI), banks and different industry bodies to work out currency swap arrangements.
This was followed by commerce and industry minister Anand Sharma’s remarks that India needed to ‘seriously’ look at currency swap agreements to stabilise the rupee.
Describing the rupee slide as “short-term shocks”, Bose said India was facing a challenge on the current account deficit front. “We have to ensure that current account deficit financing is happening in an organised and appropriate manner,” he averred.
On the much-awaited Direct Taxes Code (DTC) bill, Bose said that the government had not ‘shelved’ it and that it would be re-introduced ‘shortly’ in Parliament.
“We have not shelved it. We are in the process of seeking views of the concerned ministries. The government will shortly introduce the bill,” he said.
According to him, the newly-constituted Tax Administration Reform Commission (TARC), under the chairmanship of Parthasarathi Shome, would start giving its reports to the finance ministry after three months.
“Eighteen months is the full life of the commission. But they will start giving reports from three months onwards,” Bose added.
The TARC would review the application of tax policies and laws and submit periodic reports that could be implemented to strengthen the country’s tax system.